Practice Problems: Chapter 5, Design of Goods and Services

Problem 1:

You wish to compete in the super premium ice cream market. The task is to determine the wants of the super premium market and the attributes/hows to be met by their firm. Use the house of quality concept.

Market research has revealed that customers feel four factors are significant in making a buying decision. A “rich” taste is most important followed by smooth texture, distinct flavor, and a sweet taste. From a production standpoint, important factors are the sugar content, the amount of butterfat, low air content, and natural flavors.

Problem 2:

Prepare a bill-of-material for a ham and cheese sandwich.

Problem 3:

Prepare an assembly chart for a ham and cheese sandwich.

Problem 4:

Michael’s Engineering, Inc. manufactures components for the ever-changing notebook computer business. He is considering moving from a small custom design facility to an operation capable of much more rapid design of components. This means that Michael must consider upgrading his CAD equipment. Option 1 is to purchase two new desktop CAD systems at $100,000 each. Option 2 is to purchase an integrated system and the related server at $500,000. Michael’s sales manager has estimated that if the market for notebook computers continues to expand, sales over the life of either system will be $1,000,000. He places the odds of this happening at 40%. He thinks the likelihood of the market having already peaked to be 60% and future sales to be only $700,000. What do you suggest Michael do and what is the EMV of this decision?


ANSWERS:

Problem 1:

One possible solution for this problem is:

Problem 2:

One possible BOM would be:

Bill of Material

Bread 2 slices

Ham 1 slice

Swiss Cheese 1 slice

Lettuce 1/26 head of lettuce

Mustard 2 teaspoon

Pickle relish 1 teaspoon

Paper plate 1

Paper napkin 1


Problem 3:

Based on the BOM in Problem 2, an assembly chart might look like:

Problem 4:

The EMV for the desktop systems is $620,000 vs. $320,000 for the integrated system. Therefore, Michael should purchase the desktop systems.

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